Surviving Your First Audit AASBO Winter Conference Breakout Session III Nate Bowler, Buckeye Elementary.

Surviving Your First AuditAASBO Winter Conference Breakout Session IIINate Bowler, Buckeye Elementary

New Business Manager

Agenda

•Why you are being audited?

•How to get ready?

•What to do when they are here?

•What to do when they leave?

Why you need to be audited

•Single Audit Act Amendments of 1996

•Regulations of Office of Management and Budget (OMB) Circular A-133

•“Single Audit” – prior to Circular A-133 different funds were audited differently – “Single Audit” means looking at your entire entity

Why you need to be audited

•An A-133 Single Audit is required when an entity’s Federal Award Expenditures exceeds $500,000

•Can be direct federal funds or “pass through” funds coming from Federal indirectly

Which kind of audit?•Districts Not subject to a Single Audit and

M&O expenditures more than $2 million, must contract for an Annual Financial Statement Audit

•Less than $2 million but more than $700K Biennial Financial Statement audit

•Less than $700K Procedural review by Auditor General

Audit

Audit Objectives

•Internal Controls

•Compliance

Audit Objectives

•Internal Controls▫Test of internal controls▫Internal control structure▫Policies and Procedures▫Segregation of duties

•Compliance▫Following laws and regulations

Internal Controls & Compliance

• Testing internal controls over compliance▫Selecting samples▫“Effective” controls ▫Design, effectiveness▫Walkthrough of understanding

• Documentation of controls

• Can not use auditors as of internal controls!!!

• Not the auditors responsibility to know all the compliance requirements – it’s yours

Other Audit Objectives• Risk Assessment and Major program

determination

• Evaluate findings▫Internal Control Findings▫Compliance Findings▫Compliance finding means breakdown of internal

control▫There will be perspective (1 out of 15, 3 out of 5)

• Follow up on prior year findings – Follow

through on improvements

How to Get Ready

How to Get Ready!• USFR Memorandum No. 240

• Read your Audit RFP and Contract Award▫Audit services award▫Be familiar with who your auditor is and what

their qualifications are▫Know what your auditor is supposed to do

• USFR Compliance Questionaire

• Be aware of deadlines of reports▫Late reports are “red flag” of weaknesses in

procedures

How to get Ready!• Past audits

• Past audit finding summaries▫ Be aware that if there are findings they WILL ask and

look at them again closely▫ Status of prior findings▫ Corrected or not corrected▫ Corrective action plans▫ Planned action completion date explanation

• AZ Auditor General FAQ’s▫ http://www.azauditor.gov/Reports/School_Districts/FAQs▫ Audit Contracts▫ Deadlines for Reports

They’re Here!!!

They’re Here!!!•Plan

•Auditor needs you to make the audit successful

•Start early and schedule your audit early

•Ask your auditors early for your PBC’s (Prepared By Client document)

•Use your staff

They’re Still Here!!!• Don’t delay, ignore or hide from the auditors

• Communicate – if you don’t know what they need – Ask!

• Keep in mind - You hired them

• Auditor is there to help you

• Have what they need when they arrive before they arrive

• Documentation drives quality and it makes auditors feel good

They’re Here!

They’re Still Here!• Be there during field work

• Be actively involved – try to understand what your auditor is doing and ask questions

• At the exit ask lots of questions, audit opinion, recommendations

• Ask what findings mean

• Don’t be afraid to dispute findings – (if you have a reason to)

What to do after they leave•Share the findings with management and

staff

•Implement a corrective action plan to address findings

•Manage the corrective action plan

•Document the plan

What to do after they leave•Document the solution to findings

•Assign the plan to be done

•Share with your auditor your plan and show documentation

•Your auditors will follow up in the following year on findings

Common Problem Areas• Common findings

▫Capital Assets▫Attendance Procedures▫Cash reconciliations

• Federal Compliance for Grants▫Time & Effort▫Documentation▫Title I requirements

• USFR compliance▫Calendar items - Timely filing of Reports▫Cash receipts

Discussion and Questions?